If you are struggling with debt you cannot afford and are thinking about filing for Chapter 7 or Chapter 13 bankruptcy, you probably have a lot of questions about how bankruptcy would affect your day-to-day life.
For example, you may be wondering how long it takes to complete bankruptcy from start to finish. You are eager to get out of debt, and at the same time, you are reluctant to start a legal process that will drag on for a year or more.
Here are brief summaries of the timeline you can expect for the two most common forms of personal bankruptcy people in Austin use: Chapter 7 bankruptcy and Chapter 13 bankruptcy.
Chapter 7 bankruptcy from start to finish
In general, a Chapter 7 bankruptcy filing takes about four to six months. Then the court will issue the order discharging your debts about three to four months after that. The process begins with gathering certain documents, such as pay stubs and tax returns, as well as a list of your assets and their value. Then you generally must attend a short credit counseling session at least 180 days before you file.
One of the single longest processes can be filling out the Chapter 7 bankruptcy forms, but if you hire an attorney, they will take care of this for you. Next, you file the papers with your local bankruptcy court, which triggers an automatic stay that freezes most creditor activities. The court will schedule a 341 meeting of creditors, usually for about 30 days after the day you filed.
The meeting itself is brief, but sets the schedule for the rest of your bankruptcy. Creditors have 30 days from the date of the 341 meeting to object to the filing and 60 days to object to having their debts discharged. Meanwhile, you have 45 days to deal with your secured debts like your car loan.
Once the trustee overseeing your case completes their work, they will let the court know, who will then rule your bankruptcy complete.
Chapter 13 bankruptcy
While the Chapter 7 process typically takes less than a year, Chapter 13 bankruptcy usually lasts three to five years. That is because Chapter 13 bankruptcy involves you repaying all or part of your secured debts in manageable monthly installments. However, it should not affect your day-to-day life much over that period.
Whichever type of bankruptcy you and your attorney choose, you will emerge from it with a fresh start financially.